With retirement only three years away, it's time to move from general planning to specific decision-making. This stage is focused on refining your retirement income strategy, evaluating pension options, and preparing for healthcare and tax decisions.
Step 1: Update Your Retirement Projections
Your retirement picture is becoming much clearer.
Update estimates for:
- Pension income
- Retirement account balances
- Social Security benefits
- Expected retirement expenses
This is also a good time to stress-test your plan against inflation and market volatility.
Step 2: Create an Income Strategy
Determine how income will be generated during retirement.
Questions to address include:
- When will pension payments begin?
- When should Social Security start?
- Which accounts should be withdrawn from first?
- How will taxes impact retirement income?
A coordinated withdrawal strategy can potentially improve long-term outcomes.
Step 3: Review Tax Planning Opportunities
The years leading up to retirement often present valuable tax-planning opportunities.
Examples may include:
- Roth conversions
- Capital gains planning
- Future Required Minimum Distribution planning
Discussing these strategies early may provide additional flexibility.
Step 4: Compare Pension Payout Options
Request an updated pension estimate.
Evaluate:
- Single-life options
- Joint-and-survivor options
- Impact of retirement date on pension income
The choices made here can affect both your retirement income and your spouse's financial independence.
Step 5: Review Healthcare Costs
Meet with Kaiser HR to discuss:
- Retiree health benefits
- Monthly premium costs
- Coverage before Medicare eligibility
- Medicare transition planning
Healthcare planning becomes increasingly important as retirement approaches.
Step 6: Organize Retirement Accounts
Review all retirement accounts and confirm access.
Consider:
- Updating passwords and beneficiaries
- Consolidating old employer plans
- Reviewing investment allocations
Simplifying accounts can make retirement income planning easier.
Step 7: Test Your Retirement Budget
Start living on your projected retirement budget.
This exercise can help identify:
- Spending adjustments
- Debt reduction opportunities
- Areas requiring additional savings
Common Mistakes to Avoid
- Ignoring tax planning opportunities
- Delaying healthcare decisions
- Not comparing pension payout options
- Entering retirement with unnecessary debt
Final Thoughts
Three years before retirement is the ideal time to eliminate uncertainty. The more decisions you make now, the smoother your transition into retirement can be.
Looking for a Second Opinion on Your Retirement Plan?
With retirement only a few years away, the decisions you make now can significantly affect your income, taxes, and long-term financial independence.
Our team works with Kaiser employees to evaluate pension options, retirement income strategies, healthcare considerations, and tax-planning opportunities so they can move into retirement with greater confidence.
If you're within three years of retirement, schedule a complimentary consultation to review your retirement plan and identify any potential gaps before you leave the workforce.
Kaiser Permanente is not affiliated with or endorsed by LPL Financial or Bridgetown Wealth Management.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.